Policy Description

Employment Policies for the 50+: Norway (2016)

Year

Country

Topic

Table of contents

Introduction

In Norway, the expansion of welfare arrangements that substituted care that was previously provided within the family, paving the way for women in working life, evolved gradually since the beginning of the 19th century. At first these targeted disadvantaged groups and then later became universal, designed to fit the different phases of the life cycle (Dahl, 1994). The latter was implemented by the Law on Social Care (Lov om sosial omsorg) in 1967. The purpose of this law was to provide economic security by securing income in times of unemployment, pregnancy, birth and care for children, sickness, injury, disability, old age, and death. Furthermore, it also helped to reduce economic and social differences and acted as a countercyclical measure during hardship. The Law on Social Care was revised in 2009 and renamed as the “Law on Social Services in Work and Welfare” (Lov om sosiale tjenester i arbeids- og velferdsforvaltningen) [1]. Its chapter 19 of the Law on Social Services in Work and Welfare, it is stated that the old-age pension shall “help secure income for people of old age, and facilitate a flexible and gradually transition from working life to retirement”.

The Norwegian Labour and Welfare Administration (NAV) is the institution in charge of enforcing the law. The NAV was established in 2006, in a merger of the State Welfare Directorate and the National Insurance Administration, by the Norwegian Labour and Welfare Act. It administers one-third of the national budget through schemes such as the unemployment benefit, work assessment allowance, sickness benefit, pensions, child benefit, and cash-for-care benefit.

Activation Policies

Over the past few years, labour market conditions in Norway have been better than in most OECD countries, reflecting strong economic and productivity growth. The main challenge for Norway is to mobilise underutilised labour force, as nearly a fifth of the working-age population is out of work and receiving health-related benefits (Duell et al. 2009). In 2001, approximately 50% of the population between ages 55 and 74 (elderly) were still part of the workforce in 2001, the same as in 1972 (Wold & Håland 2012). Due to demographic change [2], fewer people are working (53 % in the age group from 55 – 74), thus requiring the government to increase its efforts to extend workforce participation. The introduction of the flexible retirement scheme, the new pension reform, and a contractual pension is part of this effort.

Elderly workers’ employment rates are among the highest in the OECD countries (Wold & Håland 2012), and the effective retirement age is comparatively high. While it seems, therefore, that companies are successful in retaining older workers, the available data suggest that once they have quit or lose their job, Norwegians 55 + face considerable difficulties in getting re-hired (Duell et al. 2009: 32).

Early Retirement Policies

The statutory retirement age in Norway is 67 years of age, but due to the Flexible Retirement Act (FRA), 60 % of Norwegian workers are entitled to retire after they turn 62 (Rønningen 2004). The regulations of the Flexible Retirement Scheme(FRS) have been implemented gradually since 2010. In order to maintain a sustainable pension system with changing demographics, strict criteria are set for whether one has the opportunity to benefit from the FRS. There are also opportunities for graded retirement.

The Flexible Retirement Scheme is intended to encourage more people to stay in the workforce after reaching the retirement age. However, this resulted in elderly workers using the arrangement to retire earlier, even though their skills are still needed (Vestad 2013). In 2011, the decline in work participation on a year-to-year basis was most evident in persons between the ages of 61 and 62, from 81 % to 63 % in males, and from 70 % to 51 % of females (Vold & Håland 2012). Regarding their background, individuals with higher education in all age groups are working more and longer than those without education (Nerland et al. 2011). The long-term effects of the new pension act are not yet evident.

The new pension reform was initially announced in 2001, when the government appointed a special pensions commission consisting of both politicians and independent experts. The reform took effect in 2011 and is scheduled for completion and should be fully implemented by 2025. The share of elderly workers (60+) who stay in their jobs has increased since 2012 (Bø 2014). However, if life expectancy continues to increase, the new pension reform will require employees born after 1970 to (probably) work until they turn 70 in order to receive full pension benefits (Statistics Norway 2015).